WEEE scheme favours big IT companies

From yesterday business users, producers and retailers of IT equipment have been required to dispose of unwanted IT hardware in a regulated fashion that could add up to £30 ($60) to the cost of a PC, says Gartner.

By
Chris Mellor
| Jul 02, 2007

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From yesterday business users, producers and retailers of IT equipment have been required to dispose of unwanted IT hardware in a regulated fashion that could add up to £30 ($60) to the cost of a PC, says Gartner.

Others have predicted that this cost will help drive many small independent IT manufacturers out of business.

While being in aid of a noble cause the implementation of the Waste Electrical and Electronic Equipment (WEEE) Directive looks to be over-complex and weighted in favour of large retailers. It may well increase the amount of IT equipment being thrown away because it will cost too much to repair.

The WEEE directive is European Union law imposed upon EU member countries. Unlike household owners of affected IT kit, businesses must dispose of unwanted kit in an approved fashion. The responsibility for taking back unwanted kit is put at the door of retailers and producers, where a 'producer' is a manufacturer or importer.

When a business buys IT kit from a producer then the payment for the taking back of old kit is a negotiable item for the supply contract from now on. Inevitably the business will pay, either directly for a specific service or indirectly through a general price rise.

Both producer and retailer have to dispose of returned e-waste through Producer Compliance Schemes (PCS) authorised by the government's Department for Business, Enterprise & Regulatory Reform (DBERR), the old DTI and its environment agency. PCSs are commercial enterprises. Local authorities have to have e-waste from their amenity centres, or Designated Collection Facility (DCF), picked by PCS' and have to have contracted arrangements with authorised PCFs for their e-waste to be picked up.

The PCS' have to pick up this waste and the costs of doing so will be paid out of public funds according to the UK market share of the manufacturers and importers in the PCS. If a PCS' members jointly have a 26 percent UK market share for printers then, it is hoped, that they pay for the pick up and recycling of 26 percent of printers from the local authority sites they pick up from. Naturally periodic returns detailing kit shipments and e-waste collected have to be made by PCS' to the government. Arrangements have to be in place for over- and under-collection. It is a bureaucrat's dream.

The UK WEEE implementation costs are reckoned to be £111 million - £133 million in the early years, rising to £331 million - £434 million by 2016 according to DTI estimates.

Estimates of how this cost will affect, for example, PC prices, range up to a £30 increase.

It costs money to join a PCS and be able to send returned e-waste to an authorised treatment facility (ATF). Electric International Ltd. operates an approved producer compliance scheme. It costs £470 for an IT manufacturer to join it if annual turn-over is less than a million pounds and £1,195.00 if over. The cost of treatment of collected e-waste starts from £26.00/tonne and the business is responsible for transporting the e-waste to the collection point. If e-waste kit can be refurbished and sold-on or revenue-generating materials recovered from it then a business' account will be credited to some extent.

Hendy Armstrong is the secretary of the Independent Trade Association of Computing Specialists, the forum for small IT manufacturers and assemblers in the UK; the smaller producers in other words. He says the situation for small producers is 'dire' with: "More than 20 percent of (his association's) small businesses actively winding down their PC business and more than 50 percent stopping producing PCs."

The reason is the cost. Hendy cites this example: "It's a very simple process for Dixons to take back wee-waste. It puts it in a DCF behind a PC World building and a PCS picks it up. For every retail pound at Dixons the cost is £0.005, half a penny. For our members, if a flat panel screen is bought new a 19-inch CRT monitor could come back, weighing 20kg or more. We have to take that to an ATF. Because it is hazardous waste the transportation cost is £25.00, and we're only making £10 profit on the flat screen. The cost for us per retail pound is 17p." That's 34 times higher than for PC World.

He thinks there was a feeding frenzy in the DTI's WEEE consultations: "I think it's a noble cause but the government has missed the point. We refurbish PCs whereas Dixons and the others are more interested in the new sale." Armstrong says there are 5,000 - 8,000 small IT producers in the UK. They will scale down their business refurbishing PCs and building them. Customers will get less choice. Dixons and the other big boys will gain market share for new kit but their support costs are higher than the independents. It won't be worth paying to have kit repaired. Instead people will buy new kit and the net effect of the WEEE will be to increase e-waste, precisely the opposite of what was intended.

In essence he is saying: prices up; business costs up; choice down; bureaucracy increased; and, worst of all, e-waste increased too. But at least it will be recycled. The intent is good, the implementation has been botched.